Buying a Home

Cost Versus Market Price in Home Sales

April 20, 2012 by khproperties Leave a Comment

The French Enlightenment writer, Voltaire, said, “Each player must accept the cards life deals him or her: but once they are in hand, he or she alone must decide how to play the cards in order to win the game.” Too often sellers of homes misplay their hands because they act on emotion and not objectivity. Most often it’s because they do not understand or purely disregard the relationship of cost versus market price. A good Realtor can help in recommending the right price for your house with a Comparative Market Analysis (CMA) – but it’s up to the seller to make the winning decision. What you paid for the home plus the cost of any any updates or upgrades you may have made while you lived in the home do not equal or determine the listing price.

Let’s back-up for a moment and establish the correlation of cost and market value to the quote above as it relates to home selling and making the right decision. One could say that when selling your property, the cards you accept are the cost of your home – what you paid for it based on location, size, and amenities, coupled with any improvements. The hand you play is how you obtain a market price and sell your home – determining what a reasonable group of buyers would pay to purchase your home based on interest rates, recent home sales, and current sales prices of similar properties in the last six months (and in a hot market even less). Similar in order of significance traditionally means location, size, and amenities. Accordingly, winning the game is obtaining the fair market value in the shortest amount of time.

The only way to do this is by listing your property at the current market value based on a CMA. Again, that means at a similar price to properties with comparable location, size, and amenities to each other. The CMA is an opinion and not an appraisal. Good agents can generally estimate if a home will appraise at its current listed price. Appraisals are done by a licensed appraiser and are only good for six months. Lenders will not provide funds that exceed an appraisal which is another reason to properly price your home.

Back to the CMA…on average, you want your listing price to be at the top of the recently sold and at the bottom of properties currently on the market. Why? Homes accurately listed at market value provide more prospective buyers. Savvy buyers have access to vast amounts of information and tend to have a better appreciation of market value. If your home is overpriced, buyers will not waste their time viewing it. You will also attract the wrong set of buyers as they are expecting more for their money. Your house will generally stay on the market longer which leads to negative perceptions of your property in buyers’ minds. Why hasn’t it sold? What’s wrong with it? It’s been on the market so long the seller’s must be willing to accept a low offer (below market value). Additionally, the process will continue to take time away from other endeavors. So why do sellers often avoid accepting the agent’s opinion on the current market value of their home?

Sadly, most people fail to recognize the hard fact that cost and market price are not related – the two concepts are totally independent. Just think, if you inherited a house for nothing (your cost) would you give it away for nothing? You would want to sell it at market value. How about the stock market? Do you always get the same price you paid for a stock when you sell it? No, sometimes it’s more and sometimes it’s less. The result is based on the market. Selling and buying homes is no different. In any real estate transaction, the objective is to sell at the price most people will pay – not the highest price that one person might pay. An expert Realtor is your best bet for obtaining the best price – but that’s predicated on you taking their advice. The current market sets the price, not the Realtor. All the real estate agent does is provide you a snapshot of the market at that time and filters it through various factors, similar to how a doctor provides an x-ray as an assessment tool.

Believe it; a good Realtor has no interest in overpricing your house. It’s as much a drain on their resources as it is yours. Typically the more your house sells for the higher the commission for the agent, right? However, if your house never sells then the Realtor never receives a commission. Real estate professionals want to maximize time, get the best deal for all involved, and earn a living like everyone else. It’s your job to make the best decision based on their advice. Understanding several pitfalls to avoid can help you remain focused on making the right decision.

Seller enthusiasm can be a detriment when it comes in the form of emotion. “Our home is better than others, we paid more when we bought it, we need more for it based on our improvements, or we are moving to a higher priced home and need the money!” These are all common thoughts. Objectivity is paramount – this is where the CMA comes into play. If you don’t like the answer, then it’s time for a tough choice. You must decide if you can hold onto the property until the market changes or sell at the current market value. Other faulty preconceived notions are that by inflating the price a seller may catch the lone foolish buyer or that building in additional bargaining room will offset low offers. Executing these concepts will only extend the time your house is on the market and thereby lessen the enthusiasm buyers have for your home, as well as negatively affecting everybody’s time and resources. If you are able, there can be an advantage to selling in a challenging market, especially if you are looking to buy.

Most people selling their home are also preparing to buy a home. Real estate statistics show that most people go up about 50% in price when buying another home. For simplicity’s sake, let’s say you see a 10% reduction in the market price of your current home – you paid $400,000 and you sell it for $360,000. However, the house you are purchasing is also in the same market and was priced at $600,000 but now sells for $540,000. In this example, you would have saved around $20,000 – you may have lost around $40,000 on the sale of your house, but you saved $60,000 on the purchase of your next home. This is one of the hidden advantages to selling and buying in a challenging market.

In the end, it’s not what you paid for the house, it’s what the market will pay for your house. Being objective about your home will equal a faster sale, assist in helping you finalize plans for your next house, provide less inconvenience, provide more prospective buyers, and serve as a magnet for good offers. In the best cases, it will provide higher net equity. It’s your choice to make, so make an informed decision based on the current market price of the home.

image courtesy of ktylerconk

Why work with a licensed real estate agent?

March 19, 2012 by khproperties 3 Comments

Lewis Carroll famously said, “If you don’t know where you are going, any road will get you there!” This is especially true for home buying. Personal due diligence in preparing an organized plan with a sound real estate agent will give you countless advantages as you navigate your way through the process. Why work with a licensed agent?

First and foremost, a real estate agent belongs to a professional society. This benefits you immeasurably. How? Once you have established an agency relationship, real estate experts are obligated to you by means of a fiduciary connection – an ethical association of confidence and trust for life. And through their professional connections, they have limitless resources to help you expeditiously locate the home that suits your needs. And through their professional experience, they can provide opportunities to obtain it at the right value and financing. They are also measured in the art of negotiation and have vast skill with the plethora of situations and their related forms. Most importantly, they will allow you to be ready when the opportunity arises. Too many people miss out on their dream property because they are not ready!

How can you prevent unpreparedness? Well, let’s take a look at some key points that can assist you. A contributing factor to readiness is financial preparation. You will have to understand your fiscal strengths and weaknesses. One way to do that is to obtain a pre-approval letter from a lender for the price range you qualify for. Agents have contacts with many lenders who can help you find the right loan to suit your needs.

What will lenders look at? In general, lenders traditionally look at several key factors. First, they will have to know how much cash you have access to and how readily available it is. Available cash will determine the loan type. They also look at current income and potential for income along with debt and credit history. These factors will help determine your loan to value ratio (LTV). Most lenders will allow 28% – 33% of income to be committed to a mortgage and no more than 36% – 41% combined with mortgage and credit debt.

Are you an existing homeowner? Can you own two homes at one time or do you need to make the deal contingent on selling your current home? If buying is dependent on selling your current home, you will have less leverage when negotiating for market value.

What if you can own two homes, should you buy first or sell first? Usually the best option is to put your home on the market and then start house hunting. The goal is to try and limit the time between the closings on selling your house and buying another. Your agent will be invaluable in assisting you with the options associated with this situation.

As you can see, we have just brushed the surface on several considerations that will assist with your preparations in purchasing a home. They ranged from establishing a fiduciary relationship to financing to selling and buying at the same time. Just remember, hope of getting lucky in finding a good deal is a method, but luck comes around a little more often when a “prepared buyer” works with a “real estate professional.”

image courtesy of Life Will Find A Way

What happens if the buyer loses their job?

March 6, 2012 by khproperties 4 Comments

Let’s play another fun game of Worst Case Scenario Survival: Real Estate Edition.

You’ve found it – the home of your dreams. It’s the perfect size for your family, in a great location, and the seller accepted your low offer. The stars are aligning and everything is moving smoothly. You fly through inspections and the finish line of closing is within sight up ahead.

And then, the boom comes – you’ve been fired from your job! To counter the financial struggle, you can earn some quick cash on sites like 텐텐벳.

In addition to the instant panic of how to pay bills, sustain your family, and how you will find another job; you’ve also got this pesky real estate contract looming overhead. It is a legally binding contract, after all. What to do? Step 1: Notify your lender and your agent, as both can help guide you. Terms of the contract and your personal financial situation may vary and can change the outcome.

Best of the Worst: Look at your real estate contract. If you made the purchase subject to your ability to qualify for a loan, there will be a form included called “Third Party Financing Addendum for Credit Approval.”

Look at the number of days you had to provide notice to the seller about your ability to secure financing. If you are within that time frame, you’ve dodged a bullet. As that paragraph reads, you can give written notice to the seller of your inability to qualify for a loan (provided that this is actually the case – again, check with your lender). As long as you are within the time frame of that paragraph, and have met all other terms of the contract, you should be entitled to a refund of your earnest money. Will you get reimbursed for inspections, option fees, or your time? No, but with the return of earnest money, you stand to get back a large chunk of money we’re thinking you could use right about now.

Worst: If your contract is subject to financing, and you’re past the timeframe of the Third Party Financing Addendum for Credit Approval, the tides may have turned against you, my friend. Assuming that the seller isn’t themselves in default by any other term of the contract, you can ask the seller to release your earnest money, but chances are great that they will deny your request. After all, they’ve taken the home off the market for a while, spent money on repairs, possibly turned down other buyers, and possibly even have to worry about the security of their own future living arrangements. Your best solution in this case might be to notify the sellers as soon as possible and try and terminate the contract. Most will want the earnest money going to them (liquidated damages) and then you may part ways.

Worst of the Worst: Take the Worst case scenario above and then add in the truly possible legal ramifications. Technically, by not closing (even if it wasn’t really your fault or intention not to close), you could be considered to be in default of the contract. Paragraph 15 of the contract states that “Seller may […] enforce specific performance [or] seek other such relief as may be provided by law…” This means potential lawsuits, court battles, financial penalties and more. There may be a clause in your contract which allows mediation before arbitration, but even that can be costly.

Remember, if you lose your job during a transaction:

– DON’T hide a job loss or change from your agent and lender.

– DON’T delay notification. Even if you are able to find a new job quickly, your loan will be affected and people will need to know.

– DO read your contract.

– DO pay attention to contract deadlines.

– DON’T become unreasonable. No one intends for these things to happen, but each party may be suffering a different loss. Try to look at things from the other perspective and a middle ground can often be found.

– DO work with an agent you can trust. They’ll be there to help guide you.

image courtesy of KellBailey

Have you seen our home search?

January 18, 2012 by khproperties Leave a Comment

When searching for a home in San Antonio, there’s no better place than right here at Kimberly Howell Properties. With our map-based home search, we make it easy to find the home that fits your needs (of course, we can always help you with your search, just contact one of our agents).

Our map-based, full-featured home search is designed to help you find homes, save favorites, and compare listings as you begin your home search. Using the easy sliders you can adjust your parameters – beds, baths, price, square footage as well as defining specific search criteria; such as zip codes, areas, schools, parking, lot size, features, price reductions and much more.

With all this info at your fingertips you can begin saving properties to your profile so that you can come back to them later or notify your agent of a home you want to see. All from the comfort of your home!

Registration is easy and can be done by filling out a simple form or connecting via Facebook, Google, or Yahoo. Don’t worry, we don’t sell your information as we take your privacy seriously. Registration allows you to save properties and pick up again where you left off, as well as allowing you to receive email alerts of new properties as they come on the market or price changes are made.

Ready to get started? Register today and start searching for homes!

Already registered? Login and continue your home search!

You can even login and register with your Facebook, Google, or Yahoo account.

How to be a good home buyer or seller.

October 20, 2011 by khproperties Leave a Comment

Buying or selling real estate can be a complex process, and even the best deals can have their moments of frustration for all parties. The entire process itself is stressful, and that can often bring out the worst (and sometimes the best) in people.

We as agents spend a lot of time promoting ourselves and the level of customer service that we provide our clients. Anyone who is a true professional has a deeper understanding of what it means to provide solid information, advice, guidance and support to clients, and this should speak for itself as we assist you with your transaction.

But since agents and loan officers and title companies would not have jobs without customers, we often downplay the fact that we need help and support from our clients as well. When buying or selling a home, rarely do we stop to think what it means to be a good customer. Here are some great tips that may help you feel better about the large undertaking, and the professionals that you will be working with along the way:

Ask questions. If you don’t understand a part of the contract, or you need clarification about a term, or even to know what comes next in the process, ask. Not only will you have a better grasp of the situation, but you will feel better at the end of the day. Real estate contracts can be complex, so don’t just skim along and hope it works out. Be involved in the process and understand what is going on with your transaction.

Listen. REALTORS® are duty bound to protect your interests above all others. Remember why you hired your agent in the first place and consider their advice carefully. It may not always be what you want to hear, but sometimes it may still be good advice. Experience counts for a lot. Most people have only bought or sold a handful of properties in their lifetime. Agents handle a handful per month. They are in a unique position to know the trends, values, and common features in local markets. And they have established relationships with other industry professionals to build upon this knowledge base.

Don’t lie. This one may seem self explanatory, but sometimes we as customers are embarrassed or ashamed of some of our actions. We think that if we don’t bring it up, no one will find out. But even the smallest omissions can turn out to be huge problems down the road. It’s better to be upfront about any issues so that your agent can help come up with solutions before they fester into huge deal-breaking disasters.

Be clear about your expectations and wishes. Take time to think about what your wants and needs are in a transaction. If you are buying, take a few moments to figure out what features are most important to you, and which you have a bit of flexibility on. If you are selling, consider things such as repairs, timeline, and price. Convey these to your agent. Time is a valuable commodity, and no one wants to waste their time or yours. Spending six weeks looking at two story houses only to discover that your mother-in-law will be living with you (and she requires a downstairs bedroom thanks to her recent hip replacement) is going to lengthen the time it takes you to find that home because of the poorly focused plan you started with.

Be fair. Real estate does not have to be a win-lose game. Yes, sellers always want more money for their properties, and buyers are looking for a better deal. But at the end of the day, everyone in the transaction is working towards the same goal of a closing. There is give and take on all sides.

Seek advice of experts. Seek out business relationships with people who have the experience to back up what they say. If your cousin’s sister’s brother kind-of knows something about electrical systems, he may not be the ideal person to conduct an overhaul of your home’s wiring before putting it on the market. It is best to contact a reliable electrician service for any electrical needs.

Don’t trump the expert. Spend time researching the people you work with so that you feel comfortable with him or her. Don’t’ be afraid to ask for references from past clients, or to verify sales figures. But once you’ve spent time doing this, trust that the professional you have selected is going to do their job. Calling every four hours about a new real estate article you saw online, demanding triplicate copies of every ad, e-mail, prospect, flyer, MLS sheet, or other document related to your house, or questioning why buying a home in San Antonio in 2011 is so different than “the way things were done” on a home purchase in 1975 in Pennsylvania may not be ways to show this confidence.

Communicate your frustrations. If the person you are working with is not performing as expected, let them know. There’s a calm, polite way to do this, and most of the time, people will respond positively to the feedback. Letting the problem persist only stresses your further and may end up doing severe damage in the end.

Follow through. Just as you are looking to work with people who do what they promise, make sure you are holding up your end of the deal. Your agent or your loan officer cannot do their job without you. So turn in those loan documents, get back to your agent with answers to important questions, and complete the required repairs when you say you will.

image courtesy of Sklathill